Set 6

Question 1

Capitalization refers to which valuation approach?

A » Income
B » Market data
C » Cost
D » Gross rent multiplier

Answer 1

A) income

(A) Capitalization is taking the net income divided by the capitalization rate (rate of return) to get the value of an income property. (B) Market data is used in residential property and vacant land by analyzing the comparables. (C) Cost figures rebuilding minus depreciation. (D) GRM is residential rental.

Question 2

T/F: Apartment complexes with more than five units must return security deposits within 30 days

Answer 2

True

Apartment complexes with more than five units must return deposits within 30 days

Question 3

Which of the following is true regarding the Residential Real Property Disclosure Act?

A » It covers all residential properties with no exemptions
B » It does not allow for rescission under any circumstances
C » It is a warranty against future defects
D » The form should be completed by the seller and not the agent

Answer 3

D » The form should be completed by the seller and not the agent

The form should be completed by the seller and not the agent

Question 4

TENANCY BY THE ENTIRETIES is very similar to joint tenancy, with the difference being that the owners must be _______

Answer 4

Husband and wife

TENANCY BY THE ENTIRETIES
Very similar to joint tenancy, with the difference being that the owners must be husband and wife

Question 5

A potential buyer calls an Illinois real estate office and an unlicensed receptionist answers the phone. The buyer asks for the price, plus the number of bedrooms and bathrooms in a new listing they have driven past. The receptionist:

A » cannot legally answer any of these questions
B » may quote the listed price and that is all
C » may answer these questions, looking at the MLS printout
D » should not be answering the phone

Answer 5

C » may answer these questions, looking at the MLS printout

It is allowable for unlicensed individuals working in a real estate office to quote information directly from published information.

Question 6

T/F: Licensed personal assistants in Illinois must have their license with the sponsoring broker of the company where they are employed, regardless of what kind of activities they perform.

Answer 6

True

Licensed personal assistants in Illinois must have their license with the sponsoring broker of the company where they are employed, regardless of what kind of activities they perform.

Question 7

In Illinois, an agent who proposes to become a dual agent must have written agreement from both buyer and seller regarding this situation. The dual agency language:

A » should be drafted by the agent’s attorney
B » may take any form, as long as it is in writing
C » is specifically dictated in the license law
D » will change the amount of compensation the agent receives

Answer 7

C » is specifically dictated in the license law

The required language is contained in Article 15 of the Illinois License Law

Question 8

T/F: Regarding real estate sales contracts, the heading “Real Estate Sales Contract” must be in bold letters

Answer 8

True

This heading in the sales contract must be in bold type.

Question 9

T/F: The Illinois Residential Real Property Disclosure Report should be completed by the seller’s agent

Answer 9

FALSE

It is the seller’s responsibility to complete. The agent should NOT complete any part of the form, including the address and date.

Question 10

T/F: The Illinois Residential Real Property Disclosure Report should be completed by the seller

Answer 10

True

It is the seller’s responsibility to complete.

The agent should NOT complete any part of the form, including the address and date.

Question 11

T/F: When someone dies, real property escheats to the county where it is located. Personal property escheats to the state.

Answer 11

True

Real property escheats to the county where it is located. Personal property escheats to the state.

Question 12

Real property vs personal property

Answer 12

“Real property” is basically real estate. It includes the land and any permanent improvements to the land like buildings, fences, landscaping, driveways, sewers, or drains.

“Personal property” is all property that is not real property like automobiles, livestock, money, and furniture.

Question 13

An Illinois homeowner dies without a will and without any traceable heirs. The real property in the estate will:

A » pass to the state by eminent domain
B » escheat to the state
C » pass to the county by eminent domain
D » escheat to the county

Answer 13

D Escheat to the county

Real property escheats to the county where it is located. Personal property escheats to the state.

“Real property” is basically real estate. It includes the land and any permanent improvements to the land like buildings, fences, landscaping, driveways, sewers, or drains.

“Personal property” is all property that is not real property like automobiles, livestock, money, and furniture.

Question 14

A Listing Company needs new listings. They run an ad offering $100 cash to anyone who lists with them in the next 30 days. Are they violating Illinois License Law?

A » Yes, they may not give out cash
B » Yes, any kickbacks are illegal
C » No, inducements to clients to buy or sell real estate are legal
D » No, as long as there is a specific time limit on the offer

Answer 14

C » No, inducements to clients to buy or sell real estate are legal

It is legal to offer any type of compensation, kickback, or prize to a client or a potential client.

Question 15

T/F: It is legal to offer any type of compensation, kickback, or prize to a client or a potential client.

Answer 15

True

according to examsmart

It is legal to offer any type of compensation, kickback, or prize to a client or a potential client.

Question 16

An Illinois home seller has AIDS. The listing agent is aware of this fact, but does not disclose it to potential buyers or to other agents. Is this a violation of license law?
Glossary Terms
License
ANSWERS
A » Yes, this is a required disclosure as AIDS is a latent defect
B » Yes, this is a required disclosure as it could affect future owners
C » No, this is not a required disclosure - AIDS would fall under “handicap,” a protected class, and should not be disclosed
D » No, this is not a required disclosure - it is the listing agent’s decision whether to disclose this information

Answer 16

C » No, this is not a required disclosure - AIDS would fall under “handicap,” a protected class, and should not be disclosed

AIDS or other medical conditions need not be disclosed. These conditions would fall under “handicap” from a fair housing standpoint.

Question 17

T/F: Drafting a lease would require an attorney, as it is preparation of a legal document.

Answer 17

True

Drafting a lease would require an attorney, as it is preparation of a legal document.

Question 18

T/F: Selling leads is a licensed activity in Illinois. Meaning you cant receive $ for referrals unless you’re an agent

Answer 18

True

Selling leads is a licensed activity in Illinois.

Question 19

Transfer tax

Answer 19

A transfer tax is a tax on the passing of title to property from one person to another.

Illinois transfer tax is $.75 per $500 of sales price, or portion thereof and is paid by the seller.

Question 20

T/F: Any interest of more than 1% in a real estate related company, other than a publicly traded one, must be disclosed.

Answer 20

True

Any interest of more than 1% in a real estate related company, other than a publicly traded one, must be disclosed.